Endurance to be sold to Sompo in $6.3bn deal

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  • Staying on: John Charman, CEO of Endurance, has agreed to stay on for at least five years after the company is taken over by Sompo

    Staying on: John Charman, CEO of Endurance, has agreed to stay on for at least five years after the company is taken over by Sompo

Bermudian insurer and reinsurer Endurance Specialty Holdings Ltd is to be taken over by a Japanese company.

Tokyo-based insurance giant Sompo has agreed to pay $6.34 billion for Endurance and the deal is expected to close by the end of March next year.

John Charman, one of the best known leaders in the Bermuda insurance industry, has agreed to stay on as chief executive officer of the Endurance team for the next five years, along with other members of the senior management team.

Mr Charman will also become chairman of the board of Sompo’s international business.

The all-cash deal represents a purchase price of $93 a share, a more than 40 per cent premium over Endurance’s closing share price on Monday. Endurance shareholders will be asked for their approval before the deal can go ahead.

The announcement marks the latest chapter in the wave of consolidation that has transformed the Bermuda insurance market in recent years. Endurance itself acquired fellow Bermudian reinsurer Montpelier Re last year, when around 40 Montpelier staff were let go, according to a source at the time.

There was no mention in the companies’ joint statement of any impact on jobs at Endurance, whose Bermuda headquarters are in Waterloo House on Pitts Bay Road.

But the statement does express admiration for the work of the Endurance management and underwriting teams.

Mr Charman, who was in Tokyo for the announcement, was able to confirm by e-mail that Endurance’s head office would remain in Bermuda.

Sompo said its special purpose company in Bermuda, Volcano International Ltd, would merge into Endurance, with Endurance as the surviving company. Through this process, Sompo Japan NI, a wholly owned subsidiary of Sompo Holdings, will purchase all of Endurance’s outstanding ordinary shares.

Sompo already has a presence in Bermuda in the form of Sompo Canopius, which has an office on Par-la-Ville Road. Sompo bought Canopius in 2013 for around $600 million.

Kengo Sakurada, CEO of Sompo Holdings, said: “Today’s agreement marks the beginning of Sompo’s overseas transformation which undoubtedly enhances the quality and reach of our insurance services. Endurance brings strength in the primary insurance business in

developed markets.

“Endurance also brings a highly experienced executive team led by one of the world’s leading property and casualty CEOs in John Charman. Mr Charman, and certain shareholders associated with Mr Charman, representing in the aggregate approximately 4.9 per cent of Endurance ordinary shares, have agreed to vote in favour of the proposed transaction.

“This acquisition will be integral in helping Sompo realise its goal of providing insurance and related services of the highest quality which contribute to the security, health and wellbeing of its customers.”

Sompo says it wants to diversify its business and gain more exposure to market’s outside Japan. Now, its overseas business provides 12 per cent of income — after the Endurance takeover this would rise to 27 per cent.

The Japanese company is also aiming to improve profits and it says return on equity would improve from 6.9 per cent to 8.2 per cent after the merger with Endurance, based on the two companies’ 2015 results.

Mr Charman said: “Today, we have strategically aligned ourselves with Sompo, a large, well-capitalised and highly respected global insurance and reinsurance company, headquartered in Japan.

“This signals the beginning of an exciting new chapter for Endurance, our wonderful and incredibly talented people and our much valued clients. When I joined Endurance just over three years ago. I stated quite publicly that cost efficient scale, globally diversified insurance and reinsurance products as well as market relevance were absolutely essential to our future success.

“I also signalled that I would seek out a high-quality, strong Asian partner to further complement our global business capabilities for the future. Our alignment today with Sompo achieves all those goals and promises so much more.

“Critically, both our companies share and practice important values daily — a commitment to the highest levels of loyalty, integrity and client service. These stated values are clearly reflected in our disciplined, focused underwriting approach which has deeply embedded, strong risk management practices.

“It is with great honour and with much joy that we all look forward to being welcomed as important family members of Sompo. Finally, to our Endurance shareholders, we thank you for your loyalty and trust over the years and are happy that you have been rewarded with an attractive premium for your investment.”

Other major deals impacting the Bermuda insurance market over the past two years have involved Ace buying Chubb, XL Group buying Catlin, Chinese investment firm Fosun Group buying Ironshore, and RenRe acquiring Platinum.

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Published Oct 5, 2016 at 10:52 am (Updated Oct 6, 2016 at 9:03 am)

Endurance to be sold to Sompo in $6.3bn deal

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